Morningstar Report Reveals Collective-Investment Trusts Poised to Overtake Mutual Funds in Target-Date Strategies in 2024
26 Marzo 2024 - 2:05PM
Business Wire
Annual Target-Date Strategy Landscape Report shows a rebound in
assets and continued decrease in fees
Morningstar, Inc. (Nasdaq: MORN), a leading provider of
independent investment insights, today published its annual
Target-Date Strategy Landscape Report, which found that in 2023
investors poured $156 billion of net inflows into target-date
strategies, of which $104.5 billion—or 67%—went into collective
investment trusts (CITs). Net flows slightly increased
year-over-year, helping propel assets to a record high $3.5
trillion.
“Investors in target-date strategies largely experienced
positive returns in 2023, after the market turmoil of 2022. Low
fees and research-driven glide paths continue to make target-dates
a great tool for hands-off investors to save for retirement,” said
Megan Pacholok, senior manager research analyst at Morningstar.
“This year, we saw target-date CITs continue their momentum, and we
expect them to surpass mutual funds as the most popular target-date
vehicle by the end of 2024.”
The 2024 report provides an in-depth analysis of the target-date
industry, including 2023 asset flow data, the pivotal role of fees
in series selection, a performance breakdown for active- versus
index-based series, and trends influenced by large plan sponsors on
investors.
The Target-Date Strategy Landscape Report is available here. Key
findings from the report include:
- Target-date assets reached a new high of about $3.5 trillion
after gathering roughly $156 billion in net flows in 2023 and
experiencing market appreciation.
- CITs now represent 49% of the market and are on pace to
overtake mutual funds as the most popular target-date vehicle this
year. These offerings absorbed 67% of total flows in 2023.
- The five managers with the largest share of target-date assets
collectively hold around 80% of the total market and have mixed
splits between mutual fund and CIT assets. Vanguard, T. Rowe Price,
and BlackRock have the majority of their assets in CITs, while
Fidelity and American Funds have a larger asset base in mutual
funds.
- Investors are favoring cheaper target-date options, which
paired with firms cutting fees, helped push the asset-weighted
expense ratio for target-date funds to 0.30% in 2023 from 0.32% the
year prior. Funds in the lowest expense quintile saw substantial
inflows while the four other quintiles experienced net
outflows.
- Target-date providers have rounded out their product shelves by
launching multiple series that have the same equity glide path but
use all active funds, all passive funds, or a mix of both. After
reviewing long-term performance trends, returns after fees are
largely similar to one another despite the differences in
underlying funds.
Morningstar today published a Fund Spy article on
Morningstar.com that reviews the latest ratings for target-date
fund series covered by Morningstar analysts, available here.
Morningstar Target-Date Fund Series
Reports
Morningstar Target-Date Fund Series Reports (the Reports) are
designed to help individual investors, financial advisors,
consultants, plan sponsors, and other interested fiduciaries make
informed decisions when selecting a target-date series.
Morningstar Target-Date Fund Series Reports and Morningstar's
Medalist Ratings for target-date series are available in
Morningstar DirectSM, the company's global investment analysis and
reporting platform for financial professionals, and in Morningstar
OfficeSM, Morningstar® Advisor WorkstationSM, and Morningstar®
Analyst Research CenterSM, the company's investment planning and
research platforms for financial advisors.
About Morningstar, Inc.
Morningstar, Inc. is a leading provider of independent
investment insights in North America, Europe, Australia, and Asia.
The Company offers an extensive line of products and services for
individual investors, financial advisors, asset managers and
owners, retirement plan providers and sponsors, and institutional
investors in the debt and private capital markets. Morningstar
provides data and research insights on a wide range of investment
offerings, including managed investment products, publicly listed
companies, private capital markets, debt securities, and real-time
global market data. Morningstar also offers investment management
services through its investment advisory subsidiaries, with
approximately $286 billion in assets under advisement and
management as of Dec. 31, 2023. The Company operates through
wholly- or majority-owned subsidiaries in 32 countries. For more
information, visit www.morningstar.com/company. Follow Morningstar
on X @MorningstarInc.
Morningstar’s Manager Research Group
Morningstar’s Manager Research Group consists of various wholly
owned subsidiaries of Morningstar, Inc. including, but not limited
to, Morningstar Research Services LLC. Morningstar Manager Research
provides independent, fundamental analysis on managed investment
strategies. Morningstar views are expressed in the form of
Morningstar Medalist Ratings, which are derived through research of
three key pillars—People, Process, and Parent. The Morningstar
Medalist Rating is the summary expression of Morningstar’s
forward-looking analysis of investment strategies as offered via
specific vehicles using a rating scale of Gold, Silver, Bronze,
Neutral, and Negative. A global research team issues detailed
research reports on strategies that span vehicle, asset class, and
geography. Medalist Ratings are not statements of fact, nor are
they credit or risk ratings, and should not be used as the sole
basis for investment decisions. A Medalist Rating is not intended
to be nor is a guarantee of future performance. This press release
is for informational purposes only; references to securities should
not be considered an offer or solicitation to buy or sell the
securities.
©2024 Morningstar, Inc. All Rights Reserved.
MORN-R
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newsroom@morningstar.com
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